How Anwar Sadat’s Open Door policy integrated Egypt with developed market economies

Special Anwar Sadat decisively broke with predecessor Nasser’s Soviet-influenced statist model by introducing the Open Door policy. (Supplied)
Anwar Sadat decisively broke with predecessor Nasser’s Soviet-influenced statist model by introducing the Open Door policy. (Supplied)
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Updated 07 October 2021

How Anwar Sadat’s Open Door policy integrated Egypt with developed market economies

Anwar Sadat decisively broke with predecessor Nasser’s Soviet-influenced statist model by introducing the Open Door policy. (Supplied)
  • Intifah broke with predecessor Gamal Abdel Nasser’s Soviet-influenced centrally planned model
  • Economy was supported by increased US aid money, Suez Canal revenues and a nascent tourism industry

LONDON: In the winter of 1973, Anwar Sadat was enjoying his time in the sun. He was “batal al-ubur” – the “Hero of the Crossing.” The 1973 war against Israel was a huge propaganda success, never mind that the reality was very different from how the Egyptian media portrayed it. 

After years of planning, the Egyptian army had successfully crossed the Suez Canal, catching the Israeli army unawares. National pride had been restored and the Egyptian public had bestowed a new title on Sadat. 

But at home, Sadat’s problem was the state of the economy. The expectations of the Egyptian public were high following the military victory; confrontation with Israel could no longer be used as an excuse for every privation they suffered. 

Defeat in the 1967 war six years previously had near-bankrupted Egypt and seriously harmed industry. Both inflation and foreign debt were high. 

Over the course of his 14 years in power, Sadat’s predecessor Gamal Abdel Nasser had courted and won the support of the Soviet Union. 

Together, Nasser and the Russians had built the second Aswan dam, a project designed to launch Egypt on the twin tracks of industrial and agricultural development. 

The ambitions had not been fully realized. The early years of the dam project were hit with teething problems. Land downstream from the dam was affected by increased salinity and waterlogging. 




Defeat in the 1967 war six years previously had near-bankrupted Egypt and seriously harmed industry. Both inflation and foreign debt were high. (AFP/File Photo)

As Sadat took power following Nasser’s death in 1970, the economy was still run according to the dictates of central planners. 

Prices for essential commodities were controlled and investment in projects was centrally dictated, leading to widespread shortages and wastage. 

Egypt’s youthful population stood at 34.5 million, with rates of growth in the order of 2.5 percent. 

The economy was hampered by low levels of productivity, an absence of relevant education and a consequent lack of skilled workers. Farmers were told what to plant. In today’s terminology, price indicators were not effective. 

Other problems persisted. One of Nasser’s legacies was the creation of a huge public sector and an overregulated state economy, emulating the Soviet Union.

He had opened up higher education to all and guaranteed a job to every graduate with little heed paid to quality or relevance of training. 

College graduates flocked into ministries, municipalities and into state-controlled companies where security of tenure was guaranteed. The result was low levels of productivity coupled with a tendency to obstruct innovation and entrepreneurship. 

Nasser had also orchestrated the emigration of large communities of Italian and Greek craftsmen, artisans and small-scale businessmen, the so-called mutamasriyun. 

While reforms in the 1950s had broken the power of the big landlords, these more minor actors had been alienated by the state seizing their property. 

Between 1962 and 1964, for example, all foreign-owned land had been expropriated. The Jewish community had also all but fled the country in the 1950s. 

INNUMBERS

* $3bn - Excess of Egyptian food imports over exports in 1981. 

* 90% - Foreign capital’s share of financing of public projects.

The result of the exodus was a collapse in municipal and other services and an absence of skilled workers in the public sector and in utilities like electricity supply. 

Sadat had never been afraid of a challenge and was fond of the dramatic gesture. He had worked as a spy for the Germans in the Second World War against the British and then served as Nasser’s deputy. He moved decisively to break with his predecessor by reopening Egypt up to foreign investment. 

This was the infitah — or opening — also known as the Open Door Economic Policy. It was a collection of liberalization measures linked to a degree of political easing. 

The policy involved a rejection of the close ties with the Soviet Union, building closer relations with the US and Arab Gulf states, and the distancing of the military from the economy. 

Following Nasser’s death, Sadat had prefigured the reforms with a Plan for National Action in 1971 and, in 1972, had expelled thousands of Soviet military advisers. 

In 1974, he promulgated a new investment regulation titled Law 43. Tariffs were lowered and foreign banks were encouraged to return to the country. Sadat reversed some of the confiscations of private property. 

The new law’s main aim was to attract Arab and foreign investment capital. To that end, it created a new organization, the General Authority for Investment and Free Zones, under the auspices of the Ministry of Economy. 

According to “The Experience of Foreign Investment Under Infitah,” by Hadi Salehi Esfahani, the law provided incentives and included a promise to refrain from nationalization and the confiscation of invested capital except by judicial procedures. It exempted investors from a number of labor regulations; it gave a five- to eight-year exemption from taxes on profits; allowed for a deferment on the payments of customs duties, and gave permission to import without a license. 




In the winter of 1973, Anwar Sadat was enjoying his time in the sun. He was “batal al-ubur” – the “Hero of the Crossing.” (Supplied)

The results were patchy but the trajectory for the Egyptian economy was upward. According to “Egypt’s Development In the 1970s,” by Henry Bruton, private investment under Law 43 was slow at the start, and did not reach 100 million Egyptian pounds ($6.6 million) until 1979. Investment was heavily concentrated in sectors such as banks, consulting offices, fast-food shops and construction. 

However, GDP growth rates rose to 8 to 10 percent per annum through the 1970s and the balance of payments moved favorably. Yields of cotton and rice increased significantly. 

Toward the end of the decade, Egypt was massively helped by a relatively sudden infusion of foreign exchange as large deposits of oil and gas came on stream and were monetized. 

The economy was also supported by increased aid money from the US, Suez Canal revenues and the beginning of Egypt’s tourism industry. The canal had been closed in 1967 but Sadat reopened it in 1975. Revenues from ships passing through the canal began to flow to the Egyptian state. 

The Gulf states also opened to Egyptian labor as their oil and gas reserves flowed. This proved to be something of a double-edged sword for Sadat. 

Many skilled and educated Egyptians chose to migrate, to take advantage of the higher wages on offer in the Gulf states and elsewhere. On the brighter side, the workers began to send back remittances — as they do to this day. 

Remittances grew from nothing in 1971 to over $2.2 billion in 1979, according to official numbers, but were probably higher if informal transfers are included. 




When Sadat took power following Nasser's death, the economy was still run according to the dictates of central planners - prices and investments were strictly controlled. (Supplied)

The combination of workers’ remittances, oil and gas revenues, earnings from the Suez Canal, and tourism receipts propelled foreign exchange reserves to $2.5 billion in 1980 from less than $0.5 billion in 1972. 

But the budget deficit swelled, inflation spiked, imports rose dramatically and income disparities grew. Defense spending remained a heavy burden. 

In 1977, the Central Bank started printing 20-pound notes. In 1979, the pound was devalued and subsequently lost almost half its value, for the first time falling below parity with the pound sterling. 

Moreover, the World Bank and International Monetary Fund were prescribing an end to subsidies on basic foodstuffs which was a major cause of the persistent budget deficits. 

In 1977, Sadat announced price hikes for flour, rice and cooking oil at the behest of the World Bank. This provoked massive riots by poor Egyptians. 

Most major Egyptian towns and cities were hit by violence. More than 70 people died. The fear of provoking similar levels of rioting has gripped the Egyptian ruling classes ever since.


UAE and Oman sign 16 agreements in transport, energy, and finance

UAE and Oman sign 16 agreements in transport, energy, and finance
Updated 19 sec ago

UAE and Oman sign 16 agreements in transport, energy, and finance

UAE and Oman sign 16 agreements in transport, energy, and finance
  • UAE President Sheikh Mohamed bin Zayed arrived in Oman on Tuesday for a two-day visit.
  • Sultan Haitham bin Tariq hosted a dinner banquet for his Emirati counterpart

DUBAI: The UAE and Oman signed 16 agreements in transport, energy, industry, and finance on the sidelines of UAE President Sheikh Mohamed bin Zayed’s visit to Muscat.
As part of the agreements, the national railway operators of both countries established a joint company with investment of about $3.01 billion to set up and operate a railway linking Oman’s Sohar port with the UAE’s network, Oman's state news agency reported on Wednesday.
Sheikh Mohamed bin Zayed arrived in Oman on Tuesday for a two-day visit.
He was received by Sultan Haitham bin Tariq of Oman before both leaders engaged in talks on strengthening bilateral ties at Al-Alam Palace.
“Their talks centered around the two leaders’ shared vision for a secure and stable region that promotes sustainable development and supports a thriving economy where people can realise their full potential,” according to a statement on the Emirates News Agency
Sultan Haitham bin Tariq hosted a dinner banquet for his Emirati counterpart on the first day of his visit. Both leaders also exchanged medals and gifts at Al-Alam Palace.


Iranian oil workers: End government crackdown or we go on strike

Iranian oil workers: End government crackdown or we go on strike
Updated 28 September 2022

Iranian oil workers: End government crackdown or we go on strike

Iranian oil workers: End government crackdown or we go on strike
  • Massive unrest has roiled Iran, with protests spreading to more than 80 cities and towns

DUBAI: Iranian oil workers have threatened to go on strike if the government crackdown against protesters continued, a move that could cripple the country’s economy dependent on hydrocarbon revenues.

“We support the people’s struggles against organized and everyday violence against women and against the poverty and hell that dominates the society,” the Organizing Council of Oil Contract Workers said on September 26, in a report from Radio Farda.

Iranian crude oil and natural gas exports accounted for 18 percent of GDP and about one-quarter of government revenues in 2019, according to estimates.

Massive unrest has roiled Iran, with protests spreading to more than 80 cities and towns, after the death of 22-year-old Mahsa Amini while under custody by morality police on September 13 for allegedly for violating the Islamic Republic’s strict dress code.

Her death has sparked the first big show of opposition on the streets since authorities crushed protests against a rise in gasoline prices in 2019.

Labor protests in Iran also have been on the rise in recent months in response to declining living standards and state support as crippling Western sanctions bear on the economy.


Yusuf Al-Qaradawi is dead but his poison lives on

Yusuf Al-Qaradawi is dead but his poison lives on
Updated 28 September 2022

Yusuf Al-Qaradawi is dead but his poison lives on

Yusuf Al-Qaradawi is dead but his poison lives on
  • Spiritual leader of outlawed Muslim Brotherhood spent decades propagating an ideology that fueled violence across the Middle East
  • He justified suicide bombings, repeatedly spoke out against Jews as a community, and issued fatwas that demean women

JEDDAH: Yusuf Al-Qaradawi, the spiritual leader of Egypt’s outlawed Muslim Brotherhood who died on Monday at the age of 96, has left behind a poisonous legacy of hatred and Islamic supremacy.

Al-Qaradawi was formally the chairman of the International Union of Muslim Scholars, a position he held for 14 years from its establishment in 2004.

More importantly, he was one of the fountainheads of the Muslim Brotherhood, a religious-political organization that has been sanctioned and proscribed by Gulf states and many Western countries.

Founded in 1928, the Brotherhood established itself in the mid-20th century as the main opposition movement in Egypt, as well as in other countries in the region. Cairo blacklisted the movement as a terrorist organization in 2013.

A BBC News website report of 2004, quoting an Arabic-language website, said Al-Qaradawi was born in a small village in the Nile Delta in 1926 and studied Islamic theology at Al-Azhar University in Cairo, from where he graduated in 1953.

Between 1949 and 1961, he was imprisoned several times in Egypt over his links to the Muslim Brotherhood and accusations that he ordered the assassination of political figures.

The Brotherhood’s followers were seen across the Islamic world as fanning religious hatred and promoting a cult of violence in order to achieve political power.

AL-QARADAWI’S CONTENTIOUS FATWAS

2003-2005: Issued several fatwas calling for a jihad against Israel and Jews, in which he deemed all adult Jews living in Palestine as “occupants” and combatants,” making them legitimate targets of war.

2004: Justified an uprising against the American presence in Iraq and permitted the killing of those who fight.

2010: Contended that suicide bombers do not really commit suicide, but die as an accidental consequence of carrying out their operations, which counts as a glorious sacrifice in holy war and qualifies them for martyrdom.

2013: Advocated the overthrow of Hosni Mubarak’s government in Egypt during the Arab Spring.

2015: Called anyone who went against the legitimate leader of the land “khawarij” (enemies of Islam) after Mohammed Morsi took office in Egypt.

In a 2019 tweet, Al-Qaradawi claimed he was not a preacher of hate and that he had spent the past 25 years promoting moderate thought.

“I stood against extremism and extremists for approximately a quarter of a century. I saw its threat to deen and dunya (religion and the temporal world), on the individual and society, and I have reinforced my pen, tongue and thought (to support) the call for moderation and reject exaggeration and negligence, either in the field of fiqh and fatwa (Islamic jurisprudence and legal pronouncement in Islam) or in the field of tableegh and da’wah (guidance and preaching),” he tweeted at the time.

However, his track record revealed exactly the opposite. He justified suicide bombings, especially in Palestine, repeatedly spoke out against Jews as a community, and issued fatwas (religious edicts) that demean women.

In a fatwa on his website, he stated that martyrdom is a higher form of jihad. And in a notorious 2004 interview on the BBC’s Newsnight program, he praised suicide bombings in Israeli-occupied Palestine as martyrdom in the name of God.

“I supported martyrdom operations, and I am not the only one,” he said.

He also encouraged Muslims who were unable to fight to financially support mujahideen (those engaged in jihad) everywhere in foreign lands. This could hardly be described as a stand against terrorism

In 2008, he was refused a visa by the UK Home Office to visit the country to receive medical treatment. David Cameron, the former Conservative Party leader, described Al-Qaradawi as “dangerous and divisive” in his appeal to the government to reject the visa application.

The Home Office said: “The UK will not tolerate the presence of those who seek to justify any acts of terrorist violence or express views that could foster inter-community violence.”

Yusuf Al-Qaradawi’s vocal support for suicide bombers and edicts demeaning women brought global condemnation. (AFP)

At the time, Al-Qaradawi was already banned from entering the US. In 2012 he was barred from entering France.

Al-Qaradawi became a familiar name in Arabic-speaking Muslim communities with his weekly appearance on the religious phone-in program Al-Shariah wa Al-Haya (Islamic Law and Life), that was broadcast to millions worldwide.

Al-Qaradawi issued fatwas authorizing attacks on all Jews. On Al Jazeera Arabic in January 2009, he said: “Oh God, take Your enemies, the enemies of Islam … Oh God, take the treacherous Jewish aggressors … Oh God, count their numbers, slay them one by one and spare none.”

He held a similar disdain and deep-seated hatred of Europeans. That Al-Qaradawi was an Islamic supremacist with a total disregard for European civilization and culture could be gauged from one of his lectures on Qatar TV in 2007.

“I think that Islam will conquer Europe without resorting to the sword or fighting. Europe is miserable with materialism, with the philosophy of promiscuity and with the immoral considerations that rule the world — considerations of self-interest and self-indulgence,” he said.

“It’s high time (Europe) woke up and found a way out from this, and it won’t find a lifesaver or a lifeboat other than Islam.”

On his show in 2013, Al-Qaradawi blasted Muslim countries as weak, and called on citizens to overthrow their governments and launch a war against all who oppose the Brotherhood, describing them as “khawarij” (enemies of Islam).

Many intellectuals and commentators in the Arab world viewed his lectures as dangerous regurgitation of Islamist dogma out of touch with the modern world.

Even though mass protests overthrew Mubarak’s successor Mohammed Morsi, a Muslim Brotherhood loyalist, some Sudanese Islamists protested the death sentence handed out to him by an Egyptian court. (AFP)

When an uprising began in Egypt against the rule of long-time President Hosni Mubarak, Al-Qaradawi supported the protesters in his TV broadcasts and issued an edict forbidding security personnel from opening fire on them.

AL-QARADAWI BIO

Name: Yusuf Al-Qaradawi

Nationality: Egyptian-born Qatari citizen

Occupation: Spiritual leader of the Muslim Brotherhood; head of the European Council for Fatwa and Research; co-founder of IslamOnline.net

Legal status: Banned from Egypt since 1997; sentenced to death in absentia in 2015; on the terror list of Saudi Arabia, Egypt, the UAE and Bahrain

Media: Hosted his own show on Al Jazeera Arabic, “Ash-Shariah wal-Hayat” (“Shariah and Life”); appearances on Al-Hayat TV, BBC Arabic, Palestinian Authority TV, Al-Faraeen TV, Al-Hiwar TV; more than 4 million Twitter and Facebook followers combined

Upon his return to Egypt in 2011, he began to lead Friday prayers for hundreds of thousands of people in Tahrir Square a week after Mubarak’s resignation.

“Don’t let anyone steal this revolution from you — those hypocrites who will put on a new face that suits them,” he told the crowd.

After long-time Egyptian President Hosni Mubarak resigned, Al-Qaradawi led sermons before hundreds of thousands of people spreading his ideas and believes. Mubarak was sentenced to life in prison in 2012 but was cleared by a higher court in 2014. (AFP) 

However, Al-Qaradawi was forced again into exile in 2013 when the military overthrew Mubarak’s successor Mohammed Morsi, a Muslim Brotherhood loyalist, following mass protests against his policies.

Al-Qaradawi condemned what he described as a “coup” and appealed to all groups in Egypt to restore Morsi to what he called his “legitimate post.”

Al-Qaradawi was sentenced to death in absentia by an Egyptian court in 2015 alongside other Brotherhood leaders.


Iran security forces clash with protesters over Amini’s death

Iran security forces clash with  protesters over Amini’s death
Updated 27 September 2022

Iran security forces clash with protesters over Amini’s death

Iran security forces clash with  protesters over Amini’s death
  • Twitter videos show protesters chanting ‘Death to the dictator,’ a reference to Khamenei

DUBAI: Iranian riot police and security forces clashed with demonstrators in dozens of cities on Tuesday, state media and social media said, amid continuing protests against the death of young Iranian woman Mahsa Amini in police custody.

Amini, 22, from the Iranian Kurdish city of Saqez, was arrested this month in Tehran for “unsuitable attire” by the morality police who enforce the Islamic Republic’s strict dress code.

Her death has sparked the first big show of opposition on Iran’s streets since authorities crushed protests against a rise in gasoline prices in 2019.

Despite a growing death toll and a fierce crackdown by authorities, videos posted on Twitter showed demonstrators calling for the fall of the clerical establishment while clashing with security forces in Tehran, Tabriz, Karaj, Qom, Yazd and many other Iranian cities.

State television said police clashed with what it called “rioters” in some cities and fired tear gas to disperse them.

Videos posted on social media from inside Iran showed protesters chanting, “Woman, Life, Liberty,” while women waved and burnt their veils.

Videos on Twitter showed protesters chanting “Death to the dictator,” a reference to Iran’s top authority Supreme Leader Ayatollah Ali Khamenei. In the Kurdish cities of Sanandaj and Sardasht, riot police fired at protesters, videos on Twitter showed.

“I will kill those who killed my sister,” chants of protesters could be heard in one of the videos from Tehran, while activist Twitter account 1500tasvir said: “The streets have become battlefields.”

To make it difficult for protesters to post videos on social media, authorities have restricted internet access in several provinces, according to internet blockage observatory NetBlocks on Twitter and sources in Iran.

On Tuesday, a spokesperson for the UN High Commissioner for Human Rights called on Iran’s clerical rulers to “fully respect the rights to freedom of opinion, expression, peaceful assembly and association.”

In a statement, Ravina Shamdasani said that reports indicated “hundreds have also been arrested, including human rights defenders, lawyers, civil society activists and at least 18 journalists.”

“Thousands have joined anti-government demonstrations throughout the country over the past 11 days. Security forces have responded at times with live ammunition,” the statement said.

Officials said 41 people, including members of the police and a pro-government militia, had died during the protests. But Iranian human rights groups have reported a higher toll.

The Iranian human rights group Hengaw said “18 were killed, 898 people were injured and over 1,000 Kurdish protesters have been arrested in the last ten days,” estimating the figures to be higher.

“Between Monday and Friday, more than 70 women have been arrested in Iran’s Kurdistan ... at least four of them are under age 18,” Hengaw said on Tuesday.

Iran’s judiciary has set up special courts to try “rioters,” according to state media.

Social media posts, along with some activists, have called for a nationwide strike. Several university teachers, celebrities and prominent soccer players have supported the protests against Amini’s death, according to statements published by them on social media.

Students in several universities have refused to participate in classes, staging protests against the widespread arrest of students and forceful encounters with security forces in universities.

Amini’s death has drawn widespread international condemnation while Iran has blamed “thugs” linked to “foreign enemies” for stirring up unrest. Tehran has accused the United States and some European countries of using the unrest to try to destabilize the Islamic Republic.


Jewish settlers storm Al-Aqsa compound for second day

Jewish settlers storm Al-Aqsa compound for second day
Updated 27 September 2022

Jewish settlers storm Al-Aqsa compound for second day

Jewish settlers storm Al-Aqsa compound for second day
  • A Palestinian security official told Arab News that Israeli police had deployed in large numbers throughout East Jerusalem and imposed restrictions on worshippers as part of a well-rehearsed tactic to prevent protests

RAMALLAH: Hundreds of settlers protected by Israeli police stormed the Al-Aqsa compound in East Jerusalem for a second day as tensions soared during the Jewish new year.

Dozens of Palestinian men and women remained inside Al-Aqsa to defend it as police prevented others under 40 from entering, deployed officers on horseback and used drones to monitor the grounds.

Despite the restrictions, dozens of Muslims were able to perform pre-dawn prayers shortly before the settlers moved in.

At least two Palestinians inside the compound were arrested for using religious chants to disrupt the settlers as they performed new year rituals in the compound’s courtyards. 

A Palestinian security official told Arab News that Israeli police had deployed in large numbers throughout East Jerusalem and imposed restrictions on worshippers as part of a well-rehearsed tactic to prevent protests.

“The number of Israeli police escorting the intrusive settlers is equal to the number of settlers, and this reflects the extent of the precautions to secure the incursions,” he said, adding that Palestinians “reject the desecration of Al-Aqsa by settlers.”

The huge police operation was also geared towards dissuading Palestinian from allowing their children to go to Al-Aqsa, he added, but warned that the situation could boil over if anyone was assaulted or killed by the police.

Israeli police had not sought coordination with the Palestinian security services, the official added.

Meanwhile, top Israeli police officer Maj. Gen. Yacov Shabtai toured the mosque, accompanied by several officers.

The Palestinian Foreign Ministry said turning the area around Al-Aqsa into a virtual military barracks and imposing restrictions on Muslim worshippers was “like reoccupying the holy city of Jerusalem and its old city by force.”

It warned of the consequences of the “gradual Judaization” of the mosque and its courtyards, saying such moves were a “blatant attack” on the beliefs of millions of Muslims and the “legal and legitimate right” of the Islamic Awqaf Department “to supervise the movement of worshippers.”

Meanwhile, Palestinians reacted with anger to President Mahmoud Abbas’s greetings to Israeli Defense Minister Benny Gantz on the Jewish new year.

Gantz asked Abbas during a call to ensure that the Palestinian security services made every effort to prevent an escalation in the West Bank during the new year holidays.

In reply, a Fatah member in Ramallah told Arab News: “Abbas didn’t surrender Jerusalem during his call with Gantz. It was a courtesy call, nothing more than that.”